The rising trend of mortgage rejections due to low income
A report from the Consumer Financial Protection Bureau reveals that mortgage applications are being rejected due to "insufficient income" at the highest rate since records began in 2018. In 2022, 9.1% of home purchase applications were denied, with refinance applications being rejected even more frequently at a rate of 24.7%. Insufficient income accounted for over 50% of denials for Asian American applicants, 45% for Black and Hispanic applicants, and approximately 40% for white applicants. The average cost of a monthly mortgage payment increased by 46% in December 2022, reaching $2,045. Rising home prices, interest rates, and increased debt levels are contributing to the higher rates of income-based mortgage denials. Lenders are also scrutinizing applicants' debt-to-income ratios and credit scores, with a higher score often resulting in a better mortgage rate.